Motorists could see insurance premiums cut by up to £15 a year after the Government announced that all driving licence records are being put online.
The searchable database for individuals and companies to check speeding endorsements and other details could also bring down the cost of car hire.
The My Licence project is the latest part of the coalition's digital agenda, which has been gradually moving services on to the internet.
Currently insurers are unable to check licence details when they sell policies - and so have to "price in" the risk that drivers either lie to them about endorsements to get a lower quote, or simply make a mistake.
But a system due to be launched by the DVLA in March will allow them to access the information through the gov.uk website using an individual's licence number, national insurance number and postcode.
The Association of British Insurers has estimated that honest motorists could save £15 on their premiums thanks to the data being put online.
Car hire companies will also have their administration burden reduced through being able to check drivers' details online rather than by phone.
The paper counterpart to the driving licence card is due to be phased out by 2015, and there will be an assisted service for those who find it difficult to use the internet.
Cabinet Office minister Francis Maude said he expected the Government will have saved more than £1.2 billion through IT efficiencies by the end of this year.
"Our digital by default agenda is part of our long-term economic plan to tackle the deficit we inherited," he said.
"To win the global race and save hard-working taxpayers more money, we need world-class public services available online 24/7 from anywhere.
"That is why it is great news that DVLA is about to launch online driving records which can be used by anyone with a driving licence as well as by the insurance industry."
He added: "This will enable insurers, for example, to price much more accurately, because they will not have to take anything on trust.
"When people say what their endorsements are on their licences you can check it so you can price much more accurately so you can reduce the cost of insurance for most people.
"Back in 2010 our digital offering was limited at best and government IT was a by-word for disaster.
"There are still challenges but with the help of the GDS (Government Digital Service) I am determined that the UK will be the G8's most digital government by next year."